Special Sibos 2014 Edition
Any change that can promote the expansion of the global economy is change for the good. Taking into account common sense, economic theory and, indeed, the very raison d’être of the World Trade Organization (WTO), such change would include a move towards freer trade in goods and services between nations. Freer trade is promoted when the costs and risks – to all parties involved - are reduced.This is a central theme of this edition of Financial IT. Many of the contributed articles focus on the technology and infrastructure governing payments – especially between corporates. Many of the articles also examine questions of trade finance. Both topics are closely linked. Innovation – whether it comes from financial IT providers, the banks or other actors – that facilitates payments between trading companies will usually make it easier to finance trade.
Any change that can promote the expansion of the global economy is change for the good. Taking into account common sense, economic theory and, indeed, the very raison d’être of the World Trade Organization (WTO), such change would include a move towards freer trade in goods and services between nations. Freer trade is promoted when the costs and risks – to all parties involved - are reduced.This is a central theme of this edition of Financial IT. Many of the contributed articles focus on the technology and infrastructure governing payments – especially between corporates. Many of the articles also examine questions of trade finance. Both topics are closely linked. Innovation – whether it comes from financial IT providers, the banks or other actors – that facilitates payments between trading companies will usually make it easier to finance trade.
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16<br />
Featured story<br />
Bethan Cowper,<br />
Head of International Marketing, Compass Plus<br />
The extent to which legacy systems still exist in the world today is<br />
astounding. It is ingrained in our nature to try to update and upgrade<br />
our technology within a couple years of the latest version being<br />
released (financial viability notwithstanding). In this digital age, this<br />
logic prevails as change is constantly upon us, and we do not dare to<br />
be left behind.<br />
In a high profile industry such as payments, we shouldn’t feel<br />
any differently. In recent years, legacy systems have shown through<br />
performance that they have an expiration date and cannot survive<br />
indefinitely. Trying to maintain and run systems that were built in the<br />
1960s and 1970s is unlikely to contribute to a future-proof business<br />
model. How can technology developed nearly 50 years ago be used to<br />
successfully run applications that, at that time, would have been on a<br />
par with that of a science fiction novel? When these systems were built,<br />
the existence of the Internet and the mobile phone were unimaginable,<br />
yet underlying legacy systems are still being used to cope with, and to<br />
some extent drive, innovations they weren’t created to support.<br />
Brick and mortar financial institutions (FIs) today, as a whole,<br />
tend to be monolithic with substantial system complexity. As the<br />
payments industry has evolved, these institutions have had to get<br />
their products launched into the market as quickly as possible in<br />
order to remain relevant. This has, in turn, led to an array of legacy<br />
systems being patched together, with additional plug-ins and<br />
add-ons to cope with the incoming requirements to support new<br />
functionality and payment channels. This less costly methodology<br />
of quickly ‘enhancing’ legacy systems has only added operational<br />
complexity. The result has been spaghetti-like systems that are more<br />
intricate and harder to navigate than ever before. Numerous mergers<br />
and acquisitions between FIs over time have put systems under even<br />
greater pressure.<br />
Today, these situations are only made worse by the fact that the<br />
staff that created the original applications are long gone, whether<br />
having retired or having moved to other roles. CIOs are currently<br />
having to deal with a skills shortage: according to a recent survey<br />
carried out by Vanson Bourne, 61 percent of CIOs believe this will<br />
result in severely reduced productivity and increased application risk<br />
that, in turn, will leave businesses more vulnerable to external attacks<br />
or system crashes. Yet nearly half of the CIOs admit they have not<br />
devised any formal plans to tackle the issue. Thus IT teams are left to<br />
deal with the inherited consequences of their FI’s technology.
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